Financials shed morning woe, REITs highlight

GregMorcroft

NEW YORK (MarketWatch) — U.S. financial stocks recovered earlier losses on Tuesday afternoon and rose on the back of gains in the asset management and real estate sectors.

Federated Investors Inc,
FII, +1.49%
CBRE Group Inc, Public Storage and T.Rowe Price Group Inc all rose more than 1.5% and were the top gainers.

Financial stocks had fallen in early trading with the broader market on concerns about the looming fiscal cliff, which is set to trigger big spending cuts and higher tax rates in early 2013.

Concern about the matter also showed up in the latest Bank of America-Merrill Lynch fund manager survey for November, released Tuesday. The report showed that a 54% majority views the U.S. fiscal cliff as the biggest tail risk confronting the markets, up from 42% in October.

Goldman Sachs Group Inc.
GS, -0.68%
recovered from its early losses, but rival Morgan Stanley
MS, -0.84%
was unable to shake off all its drop and remained lower Tuesday afternoon.

The companies’ shares could end up facing some pressure as a result of Leucadia Corp.’s
LUK, +0.56%
move to buy out Jefferies Group
US:JEF
a much smaller investment bank, for a price pegged at 1.2 times current book value, according to a post on the DealBook blog late Monday. That’s higher than the comparable multiples for the two larger firms.

As DealBook puts it, “The important point is that a large financial company is willing to put down real money to acquire a brokerage firm, paying more than its tangible book value.” The discrepancy between the multiples means either the market is nervous about prospects for Goldman and Morgan Stanley, or alternatively, that investors see their size and complexity as a potential drag on profitability. Read full story on DealBook

Late Friday, Fortune magazine reported that Citigroup agreed to pay former CEO Vikram Pandit, who resigned last month in a management shakeup, an “incentive award” totaling $6.7 million for his work this year. Read more about Pandit pay

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